Home Price Declines Accelerate in Second Quarter

One wonders – actually one shouldn’t because it can be taken as a given – if some people on Wall St and in the governement are still living in the same world, or if they suffer from a medical condition.

How else does one explain the claim by several pundits that ‘the recession was over’ and then reading the following from Bloomberg:

Aug. 12 (Bloomberg) — Home price declines in the U.S. accelerated in the second quarter, dropping by a record 15.6 percent from a year earlier, as foreclosures weighed on values.

The median price of an existing single-family home dropped to $174,100, the most in records dating to 1979, the National Association of Realtors said today. Total sales rose 3.8 percent to a seasonally adjusted annual rate of 4.76 million from the first quarter and fell 2.9 percent from 2008’s second quarter.

Prices fell in 129 out of 155 metropolitan areas from a year ago and 39 states experienced sales increases from the first quarter, the Chicago-based realtors group said. Sales in U.S. housing market at the heart of the global recession are beginning to stabilize, said Patrick Newport, an economist for Lexington, Massachusetts-based IHS Global Insight.

“I don’t think we’re at a bottom yet in home prices,” said Scott Anderson, a senior economist at Wells Fargo & Co. in Minneapolis. “There’s also a pretty big shadow supply of houses. People are kind of waiting for the bottom but there’s a pent-up supply out there.”

Still here they are on Reuters:

WASHINGTON (Reuters) – The worst U.S. recession since the Great Depression will probably end in the third quarter, but uncertainty exists over the speed and duration of the economic recovery, according to the most recent survey of private economists.

The Blue Chip Economic Indicators survey of private economists released on Monday showed about 90 percent of the respondents surveyed believe the economic downturn will be declared to have ended this quarter.

This upbeat assessment followed recent government data showing gross domestic product (GDP) contracted at a shallow 1.0 percent rate in the second quarter after sinking 6.4 percent in the January-March quarter.

Recent data, including housing and key labor market indicators, have suggested a bottoming in the recession and the economy close to turning the corner. The economy slipped into recession in December 2007.

So their optimism is based on a) a quarterly GDP decline less severe than the one in the previous quarter; and b) a bottoming of the housing and labor markets.

And it now just turns out that the bottoming of the housing market is not happening, neither is the one in labor markets (birth-death-adjustments anyone and other tricks).
So there would remain the less severe decline in GDP. I bet this will turn out to be a lie as well.